A COMPARATIVE ANALYSIS OF COLLECTIVE BARGAINING IN INDIA AND THE UNITED STATES OF AMERICA

A COMPARATIVE ANALYSIS OF COLLECTIVE BARGAINING IN INDIA AND THE UNITED STATES OF AMERICA

Author: Jennifer Mary Cherian
Student, 3rd Year BBA LLB (Hons.)
School of Law, CHRIST (Deemed to be University)

Abstract
The growth and industrialization of any country depends upon various economic and social factors. One such factor is industrial relations. Industrial relations refer to the liaison between the management and the employees that work in an industry. This also includes the grievance mechanism implemented in every industry in order to address the problems of the workforce. Industrial relations are important for numerous reasons including increased productivity, reduced industrial disputes and increased morale of the workmen.

Collective bargaining is an essential aspect of industrial relations. So much so that in modern times it has become a fundamental prerequisite to the smooth functioning of an industry. Collective bargaining refers to the process by which the terms of employment is negotiated between the workmen, usually in the form of trade unions, and the employer. ILO Convention No. 154 (Article 2) defines collective bargaining as referring to, “all negotiations which take place between an employer, a group of employers or one or more employers’ organisations, on the one hand, and one or more workers’ organisations, on the other, for (a) determining working conditions and terms of employment (b) regulating relations between employers and workers (c) regulating relations between employers or their organisations and a workers’ organisation or workers’ organisations”. Collective bargaining encourages the peaceful settlement of disputes and ensures that the interests of the labourer are well protected.

In this paper a comparative analysis will be made between the collective bargaining process in a developed country (The United States of America) and the same process in a developing country (India). In an industrially progressive country like the United States, the process of collective bargaining is systematised through well-coordinated labour unions and employers’ associations such as The American Federation of Labour and the Congress of Industrial Organizations. However, in the case of the developing Indian industries, the role of collective bargaining is very limited and most disputes are either referred to or adjudicated by the courts. A qualitative method of study will be adopted in order to analyse the above. Further the Industrial Disputes Act 1947 and the National Labor Relations Act will also be scrutinized in order to understand the reasons for the vast distinction in the success of the ideology of collective bargaining in both countries.

Keywords:
Collective Bargaining, Employer Association, Industrial Relations, Redressal, Trade Union.
References:

1.     INTRODUCTION

Collective bargaining refers to a process wherein employer and employees undertake the process of negotiation in order to regulate various aspects of the employer-employee relationship such as working salaries, working conditions, benefits, workers compensation and rights of the workers. This process of collective bargaining involves various processes such as negotiations, drafting and administration. The primary objective of collective bargaining is to arrive at a settlement between the management and the employees such that the interests of both parties are taken into consideration in the form of mutually beneficial terms and conditions of employment. Trade Unions commonly represents the interests of the employees. The end result of collective bargaining is the collective bargaining agreement (CBA). The collective agreement functions as the labour contract between the employer and one or more unions. 

The increasingly harsh competition brought about by technological innovation and globalization has led to a reduction in the influence exercised in many countries by sectoral agreements and has given added importance to collective bargaining at the enterprise level (and at lower levels, such as the work unit, the factory or the workplace), strictly taking into account the criteria of productivity and output. Flexibilization and deregulation of work have thus encouraged the growth of collective bargaining at enterprise level.[1]

In both India and the United States of America, collective bargaining has been used as a tool to improve industrial relations. In India collective bargaining remained extremely limited in scope and lacked a well-defined legal structure. Further it is to be noted that only a very limited section of the work force falls under the applicability of labour laws where a guaranteed space for collective bargaining is present with adequately distinguished legal boundaries. According to the Fifth Economic Census (1999), more than 97 percent of the enterprises employ less than ten workers, out of which most employ less than five workers.[2]Therefore, protective labour laws apply to only less than three percent of the enterprises; and in the rest of the 97 percent enterprises only Industrial Disputes Act (minus its protective sections like section V-A, V-B), Minimum Wages Act, the Workmen’s Compensation Act, Equal remuneration Act, and the Shops and Establishments Act (enacted by each state separately) and some pieces of labour legislation enacted for specific occupations are applicable. Generally, these 97 percent enterprises are said to represent industrial informal sector (those not covered under Factories Act) and the three percent as formal sector (those covered under Factories Act). Total workforce employed in different sectors in India (principal plus subsidiary employment) is about 456 million, of which informal sector accounts for about 393.2 million (86 percent).[3]

In the United States as well collective bargaining has a long-drawn history, however it was not enabled or protected by legislation until the 20thCentury when the need for collective bargaining in healthy industrial relations was established. Today the United States has three distinct regimes of collective bargaining: one for the railroad and airline industries, one for the rest of the private sector, and one for the public sector. However, this last is really 51 distinct systems, because the federal government and the 50 states each has its own collective bargaining law for pu
blic employees.[4]The distinct legislations are The Railway Labor Act of 1926 and The National Labor Relations Act of 1935.
2.     COLLECTIVE BARGAINING IN INDIA
The Supreme Court of India has defined collective bargaining as “the technique by which dispute as to conditions of employment is resolved amicably by agreement rather than coercion”.[5] As mentioned above, collective bargaining is generally the process of discussing and negotiating terms of employment and working conditions between the employer and employee. The trade unions represent the workers by approaching the employer and communicating the collective grievances of the workers. Refusal to engage in collective bargaining with the employer is considered as an unfair labour practice according to the Industrial Disputes Act, 1947. However, the legal procedure for pursuing collective bargaining in India is complicated.

Stages of Collective Bargaining in India

i.          Charter of Demands
Typically, the trade union notifies the employer of a call for collective bargaining negotiations. However, in certain cases the employer may also initiate the collective bargaining process by notifying the union. The representatives of the trade union draft a “charter of demands” through various discussions and consultations with union members. The charter typically contains issues relating to wages, bonuses, working hours, benefits, allowances, terms of employment, holidays, etc. In an establishment with multiple unions the employer generally prefers a common charter of demands, but in principle, all unions may submit different charters.

ii.          Negotiation
As a next step, negotiations begin after the submission of the charter of demands by the representatives of the trade union. Prior to such negotiations, both the employer and the trade unions prepare for such negotiations by ensuring collection of data, policy formulation and deciding the strategy in the negotiations.[6]After such preparation, the negotiations take place wherein the trade unions and the employer engage in debates and discussions pertaining to the demands made by the trade unions.[7] In the event that such demands are rejected, the trade union may decide to engage in strikes. The collective bargaining process obviously takes long where the employer has to engage with multiple unions. In the public sector, it may take months or even years. For example, the Joint Wage Negotiating Committee for the Steel Industry, covering workers in four large unions, took more than three years from the date of the submission of the charter of demands to the Steel Authority of India Ltd. (SAIL).[8]

iii.          Collective Bargaining Agreement
Next, a collective bargaining agreement will be drawn up and entered into between the employer and workmen represented by trade unions. It may be structured as bipartite agreement, memorandum of settlement or consent award.

iv.          Strikes
If both parties fail to reach a collective agreement, the union(s) may go on strike. As per the IDA, public utility sector employees must provide six weeks’ notice of a strike, and may strike fourteen days after providing such notice (a ‘cooling off period’).[9]Under the IDA, neither side may take any industrial action while the conciliation is pending, and not until seven days after the conclusion of conciliation proceedings or two months after the conclusion of legal proceedings.[10]

v.          Conciliation
A conciliation proceeding begins once the conciliation officer receives a notice of strike or lockout. During the ‘cooling off peri
od’, the state government may appoint a conciliation officer to investigate the disputes, mediate and promote settlement.[11]On the other hand, it may also appoint a Board of Conciliation which shall be appointed in equal numbers on the recommendation of both parties, and shall be composed of a chairman and either two or four members.[12]No strikes may be conducted during the course of the conciliation proceeding.[13]Conciliation proceedings are concluded with one of the following recommendations: (i) a settlement, (ii) no settlement or (iii) reference to a labour court or an industrial tribunal.[14]

vi.          Compulsory Arbitration or Adjudication by Labour Courts, Industrial Tribunals and National Tribunals
When conciliation and mediation fail, parties may either go for voluntary or compulsory arbitration. In the case of voluntary arbitration, either the state or central government appoints a Board of Arbitrators, which consists of a representative from the trade union and a representative from the employer. In the case of compulsory arbitration, both parties submit the dispute to a mutually-agreed third party for arbitration, which is typically a government officer. Arbitration may be compulsory because the arbitrator makes recommendations to the parties without their consent, and both parties must accept the conditions recommended by the arbitrator. Section 7A of the IDA provides for a labour court or industrial tribunal within each state government consisting of one person appointed to adjudicate prolonged industrial disputes, such as strikes and lockouts. Section 7B provides for the constitution of national tribunals by the central government for the adjudication of industrial disputes that involve questions of national interest or issues related to more than one state. In such a case, the government appoints one person to the national tribunal and can appoint two other advisers. If a labour dispute cannot be resolved via conciliation and mediation, the employer and the workers can refer the case by a written agreement to a labour court, industrial tribunal or national tribunal for adjudication or compulsory arbitration. A final ruling on the industrial dispute must be made within six months from the commencement of the inquiry.[15] A copy of the arbitration agreement signed by all parties is then forwarded to the appropriate government office and conciliation officer pursuant to which the government must publish the ruling in the Official Gazette within one month from receipt of the copy.[16]
3.     COLLECTIVE BARGAINING IN THE UNITED STATES
As mentioned earlier in the paper, collective bargaining in the United States has a protracted history beginning in the 19th century and finally ending with a well-defined legislation in the 20th Century.

Labour Organisations in the United States
In the early nineteenth century, several associations of workmen were held to be illegal combinations; and strikes for the purpose of raising wages were declared to be criminal conspiracies. A notable change in attitude was expressed in 1842 by one court which held that it was not unlawful for workmen to combine and to induce all those engaged in the same occupation to become members. [17]By the latter part of the century the lawfulness of labour organisations per se were seldom questioned. Instead, judicial decisions turned upon what could be considered permissible activities of labour unions and whether the methods they used could be deemed legal. Although the right to strike was generally considered to be legal, some courts maintained that only those strikes were legal which the court decided had a legal justification.[18]Therefore according to court decisions strikes held for reduction of hours and increase of wages were lawful while strikes for the closed shop involving the discharge of non-union workmen were frequently condemned. Further primary boycotts were held lawful by the court while secondary boycotts were held unlawful. Interference with collective activity of workers was made effective most often by the issuing of injunctions to cease certain proscribed acts. Without judicial review or jury trial, defendants were subjected to fines and imprisonment for ” contempt of court ” if the judge’s orders contained in the injunction were not strictly observed. If it was held’ that such acts interfered with interstate commerce, triple damages could be recovered under the Sherman Anti-Trust Act.[19] In 1922 the Supreme Court held that unions could be sued as entities and that there was no limited liability for union members as there was with corporation stockholders.[20]While the prevalence of court decisions was mainly on placing restrictions on labour unions, several legislative attempts were made to augment the scope of acceptable activities as well as to narrow the scope of employers to restrict these activities. Though these legislations were made primarily to help the workers, legitimate gain for the worker was very meagre as a result of courts overruling such legislations and strictly restricting the same. Thus, a statute passed in 1898, prohibiting railroad employers from discharging or refusing to hire persons because of union membership or activity, was held unconstitutional because it interfered with the liberty of contract between the employer and employee.[21]In a later case in 1915 the courts held, on the same grounds, that all laws were unconstitutional which prohibited employers to require anti-union promises as a condition of employment.[22]Subsequently union organisers were enjoined from soliciting among workers who had signed such anti-union (yellow-dog) contracts.[23]

In 1918 however, the War Labour Conference Board reinforced the rights of workers and employees to participate in organisation activities by the declaration of a labour policy that:
“The right of workers to organise in trade unions and to bargain collectively, through chosen representatives, is recognised and affirmed. This right shall not be denied, abridged, or interfered with by the employers in any manner whatsoever.”[24]
Trade unions benefited greatly from the adoption of these principles by the National War Labor Board leading to the growth of labour organisation during the war being marked.  Later on however during the twenties most of the advancements that the trade unions made for their rights were faced with a set back in the form of post war depression and the anti-union campaigns carried on by the employers.

The first federal legislation was made for the benefit of the railroad workers to protect them from interference in their self-organisation and designation or representatives for collective bargaining. This Act, further strengthened and clarified by Amendments in 1934[25], imposed upon employer and workers the duty ” to exert every reasonable effort to make and maintain agreements concerning rates of pay, rules, and working conditions “. These agreements were to be negotiated through labour organisations which have the support of at least a majority if the employees. Further the employers were forbidden to interfere in the self-organisation of employees.

Another way that the workers were protected was through the Norris-LaGuardia Act[26](passed by Congress in 1932) wherein protection was given to workers against the issuance of injunctions by the courts. The Act ensured that injunctions would not be passed against the normal and peaceful activities connected with an industrial dispute and also states that an injunction should only be granted after an open hearing by the court. This Act protected mainly the interests of officers and unions by ridding them of liability for unlawful acts of its members.

The National Labor Relations Act and Collective Bargaining
The National Labor Relations Act was enacted with the objective to strengthen collective bargaining along with the objective to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy.[27]U.S. Supreme Court has repeatedly held that the Act “is designed to perform a remedial function  and that punitive sanctions may not be imposed for violations”.[28]Therefore the legislation was enacted with the fact in mind that the remedies were not intended to serve as penalties in the strict legal sense, in fact the penalties in the Act are termed as de facto penalties. The NLRA contain workplace policies that bid to change the behaviour of individuals, organizations and markets. These policies are made on the assumption that when parties are left on their own to make choices, these choices will be against public interest in the majority. The main aim of the penalties set out under the Act is to increase party cost in case of non-compliance in mainly two ways. The first way that the Act does this is by imposing a cost or penalty on past violations as well as current ongoing non-compliance. The second way is that the penalties change the behaviour of the parties prospectively. This means that the parties view the penalties as an unnecessary cost to be incurred and in turn seeks to avoid those costs through voluntary compliance.

The NLRA makes it unlawful for an employer to discriminate against an employee because of that employee’s union activities or affiliation. Also, employers cannot threaten or coerce employees for engaging in union activity nor can they make promises to employees in exchange for their not engaging in union activities.

The NLRA’s employee protections extend also to employees who, although not affiliated with a union, engage in concerted, protected activity. Concerted, protected activity is activity engaged in by one or more employees with the intention of improving the terms and conditions of employment of all employees. Examples of protected concerted activity include complaints from a group of employees about wage rates and benefits and discussions between employees about wages and benefits. Employers should not maintain work rules that prohibit employees from discussing their wages or benefits with co-workers, as such rules generally violate the NLRA.
The NLRA also created the National Labor Relations Board (NLRB), which is responsible for enforcing the terms of the NLRA. The NLRB, in addition to its enforcement authority, has the responsibility of conducting representation elections and certifying unions as the bargaining representatives of employees. The election process is initiated when a union or group of employees files a petition with the NLRB seeking a representation election. Employees who are currently represented by a union may also file a petition seeking to decertify a union as their representative.
Employers who either voluntarily recognize a union or whose employees vote to have a union represent them are obligated to bargain with union in good faith in an attempt to reach an agreement on a collective bargaining agreement. Once the employer and the union agree to a collective bargaining agreement, the employer is not allowed to change it employees’ terms and conditions of employment without first seeking to bargain with the union.
The NLRA also places obligations on unions. First, the NLRA imposes on unions a duty to represent the employees in the bargaining unit fairly. Second, the NLRA prohibits unions from engaging in certain types of strikes.
4.     CONCLUSION
As seen above collective bargaining in both India and the United States are governed by their respective legislations. In both countries, a well-defined legal structure for the process of collective bargaining took a while to be implemented. However, in both countries law makers understood the importance of collective bargaining to improve industrial relations and to keep workers at an optimal level of productivity.
In the United States, some three-quarters of private-sector workers and two-thirds of public employees have the right to collective bargaining. This right came to U.S. workers through a series of laws. The Railway Labor Act granted collective bargaining to railroad workers in 1926 and now covers many transportation workers, such as those in airlines. In 1935, the National Labor Relations Act clarified the bargaining rights of most other private-sector workers and established collective bargaining as the “policy of the United States.” The right to collective bargaining also is recognized by international human rights conventions.
The freedom to form and join a union is core to the U.N. Universal Declaration on Human Rights and is an “enabling” right—a fundamental right that ensures the ability to protect other rights.

Every year, millions of America’s wo
rkers negotiate or renegotiate their bargained contracts. However, some employers seek to undercut existing bargaining relationships and roll back many hard-won contract terms and conditions. Unions continue to fight for the intrinsic rights of working people and restore the balance of economic power in our country through collective bargaining agreements.

Collective Bargaining in India has been the subject-matter of industrial adjudication since long and has been defined by our Law Courts. In Kamal Leather Karamchari Sangathan v. Liberty Footwear Company[29] the Supreme Court observed that, “Collective bargaining is a technique by which dispute as to conditions of employment is resolved amicably by agreement rather than coercion”.
According to the Court, the Industrial Disputes Act, 1947, seeks to achieve social justice on the basis of collective bargaining. In an earlier judgment in Titagarh Jute Co. Ltd. v. Sriram Tiwari[30] the Calcutta High Court clarified that this policy of the legislature is also implicit in the definition of ‘industrial dispute’.

In Ram Prasad Viswakarma v. Industrial Tribunal[31]the Court observed that, “it is well known how before the days of ‘collective bargaining’, labour was at a great disadvantage in obtaining reasonable terms for contracts of service from its employer. As trade unions developed in the country and collective bargaining became the rule, the employers found it necessary and convenient to deal with the representatives of workmen, instead of individual workmen, not only for the making or modification of contracts but in the matter of taking disciplinary action against one or more workmen and as regards all other disputes.”
A lot has been said about the development of collective bargaining in India. But in fact, collective bargaining which is a two way affair, has been used at present only as a one-way exercise in which the union, as the aggressive partner, makes the demands, and the management, as the passive partner, derives satisfaction merely by countering the extent to which it is able to minimize the additional burdens while meeting the union’s demands. There are not many examples even now where union as well as the management, as equal partners, have approached the process of collective bargaining with the objective and spirit that collective bargaining must bring concrete benefit to both the parties.


[1] Bernard Gernigon, Alberto Odero & Horacio Guido, ILO Principles Concerning Collective Bargaining, 139 Int’l Lab. Rev. 33 (2000).


[2] Provisional Results of Fifth Economic Census 2005; Government of India, Ministry of Statistics and Programme Implementation; http://mospi.nic.in/economic_census_prov_results_2005.pdf
[3] The Challenge of Employment in India: An Informal Economy Perspective; Volume I – Main Report; National Commission for Enterprises in the Unorganized Sector; 2009;http://nceus.gov.in/The_Challenge_of_Employment_in_India.pdf

[4] 2014, An Overview of Collective Bargaining in the United States, Lance A. Compa
[5] Karol Leather Karamchari Sangathan v. Liberty Footwear Company, (1989) 4 SCC 448

[6] R. Sivarethinamohan, Industrial Relations and Labour Welfare: Text and Cases, page 286, Available at https://books.google.co.in/ books?id=OBu-LapJUAcC&printsec=frontcover (Accessed on January 22, 2019)

[7] Ibid

[8] P.D. Shenoy, Voluntary bipartite approaches towards industrial peace: Indian experience (Bangkok, ILO, 1991), pp. 17-26

[9] Section 22 of the IDA

[10] Section 23 of the IDA

[11] Section 4 of the IDA

[12] Section 5 of the IDA

[13] Section 22 and 23 of the IDA

[14] Section 20 of the IDA

[15] Govt. of India: Section 36 of the Industrial Dispute Act, 1947 (New Delhi, Govt. of India, 1947), at p. 22

[16] Ibid at p. 18 and p. 22

[17] Commonwealth v. Hunt, 4 Metcalf 111 (Massachusetts 1842;).

[18] DeMinico v. Craig, 207 Mass. 593, 94, N. E. 317 (1911).

[19] U.S. Code, 1934, Title 15, Ch. I, 26 Stat. 209 (1890).

[20] United Mine Workers of America v. Coronado Coal Co., 259 U.S. 844, 42 Sup. Ct. 570 (1922).

[21]Adair v. United States, 208 U.S. 161 (1908)..

[22] Coppage v. Kansas, 236 U.S. 1 (1915).

[23] Hitchman Coal and Coke Co. v. Mitchell, 245 U.S. 229 (1917).

[24] Report of the War Labor Conference Board to the Secretary of Labor, 29 March 1918, printed in U.S. Bureau of Labor Statistics Bulletin No. 287: National War Labor Board, p. 31.

[25] 44 U.S. Stat., 577 (1926). Railway Labor Act of 1934 (U.S.C., Title 45, secs. 151 to 164; 48 Stat. 1185).

[26] Public Act No. 65 (23 March 1932).

[27] https://www.nlrb.gov/how-we-work/national-labor-relations-act

[28] United Brotherhood of Carpenters v. NLRB, 365 U.S. 651, 655 (1961)

[29] AIR 1990 SC 247

[30] (1979) Lab I.C. 523 (Cal)]

[31] (1961) I LL.J 504
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